Section 210 of the Income Tax Act, 1961 is an important provision that deals with the payment of advance tax. It is essential for taxpayers to understand the provisions of this section to ensure that they comply with the tax laws and avoid any penalties or interest charges.
What is Advance Tax?
Advance tax is the tax that is paid in advance by a taxpayer on their estimated income for the current financial year. The purpose of advance tax is to ensure that the government receives a steady stream of revenue throughout the year rather than waiting until the end of the year to collect taxes. Advance tax is applicable to all taxpayers, including individuals, self-employed professionals, and companies.
Provisions of Section 210
Section 210 of the Income Tax Act specifies the following provisions related to advance tax:
- Liability to Pay Advance Tax: As per this section, any person whose estimated tax liability for the financial year is Rs. 10,000 or more is liable to pay advance tax.
- Due Dates for Payment of Advance Tax: Advance tax is to be paid in instalments during the financial year. The due dates for payment of advance tax are as follows:
- On or before 15th June – 15% of the estimated tax liability
- On or before 15th September – 45% of the estimated tax liability
- On or before 15th December – 75% of the estimated tax liability
- On or before 15th March – 100% of the estimated tax liability
Computation of Estimated Tax Liability: The estimated tax liability is calculated based on the taxpayer’s estimated income for the financial year, the applicable tax rate, and deductions, if any.
Interest on Default in Payment of Advance Tax: If a taxpayer fails to pay advance tax or pays less than the required amount, they will be liable to pay interest under section 234B and section 234C of the Income Tax Act.
Self-Assessment Tax: If the taxpayer has not paid the full amount of advance tax, they must pay the balance amount as self-assessment tax by the due date of filing the tax return.
Penalty for Non-payment of Advance Tax: If a taxpayer fails to pay advance tax or pays less than the required amount, they may be liable to pay a penalty under section 221 of the Income Tax Act.
Exceptions to liability for advance tax: There are certain exemptions to the liability for advance tax. For example, senior citizens who do not have any income from business or profession are not liable to pay advance tax. Similarly, taxpayers who have opted for the presumptive taxation scheme under Section 44AD or Section 44ADA are also exempt from paying advance tax.
How to pay advance tax: Taxpayers can pay advance tax either online or offline. Online payment can be made through the income tax department’s website using internet banking, debit card, or credit card. Offline payment can be made by depositing the amount in an authorised bank.
Consequences of non-payment of advance tax: If a taxpayer fails to pay advance tax or pays less than the required amount, they will be liable to pay interest under Section 234B and Section 234C of the Income Tax Act. The interest rate is 1% per month for both sections. In addition, a penalty of 1% per month may also be levied under Section 221 of the Income Tax Act.
Importance of accurate estimation of income: Accurate estimation of income is crucial for the calculation of advance tax liability. Taxpayers must take into account all sources of income, including salary, business income, capital gains, and income from other sources. Any failure to estimate the correct income may result in a penalty under Section 221 of the Income Tax Act.
Timely payment of advance tax: Timely payment of advance tax is important to avoid interest and penalty charges. Taxpayers should ensure that they make the payment before the due dates specified under Section 210. Any delay in payment may attract interest charges.
In conclusion
Section 210 of the Income Tax Act is an important provision that governs the payment of advance tax. Taxpayers should ensure that they comply with the provisions of this section to avoid interest and penalty charges. Accurate estimation of income and timely payment of advance tax are key factors to ensure compliance with this provision.
Read more useful content:
- section 145 of income tax act
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Frequently Asked Questions (FAQs)
Q. Who is liable to pay advance tax under Section 210?
Any person whose estimated tax liability for the financial year is Rs. 10,000 or more is liable to pay advance tax. This includes individuals, self-employed professionals, and companies.
Q. What is the due date for payment of advance tax?
Advance tax is to be paid in instalments during the financial year. The due dates for payment of advance tax are as follows:
a. On or before 15th June – 15% of the estimated tax liability
b. On or before 15th September – 45% of the estimated tax liability
c. On or before 15th December – 75% of the estimated tax liability
d. On or before 15th March – 100% of the estimated tax liability
Q. What is the penalty for non-payment of advance tax?
If a taxpayer fails to pay advance tax or pays less than the required amount, they may be liable to pay a penalty under Section 221 of the Income Tax Act. The penalty is equal to 1% per month on the amount of tax unpaid.
Q. What is the interest charged for default in payment of advance tax?
If a taxpayer fails to pay advance tax or pays less than the required amount, they will be liable to pay interest under Section 234B and Section 234C of the Income Tax Act. The interest rate is 1% per month for both sections.
Q. How to calculate estimated tax liability?
The estimated tax liability is calculated based on the taxpayer’s estimated income for the financial year, the applicable tax rate, and deductions, if any. Taxpayers should ensure that they accurately estimate their income to avoid any penalty or interest charges.
Q. Is there any exemption from the liability to pay advance tax?
Yes, there are certain exemptions to the liability for advance tax. For example, senior citizens who do not have any income from business or profession are not liable to pay advance tax. Similarly, taxpayers who have opted for the presumptive taxation scheme under Section 44AD or Section 44ADA are also exempt from paying advance tax.
Q. How to pay advance tax?
Taxpayers can pay advance tax either online or offline. Online payment can be made through the income tax department’s website using internet banking, debit card, or credit card. Offline payment can be made by depositing the amount in an authorised bank.
